Monthly Archives: February 2013

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To be 100% direct, the nascent but developing mobile advertising market is what I call the wild, wild west – meaning there are no rules or established practices commonplace in more well developed areas of advertising. The following article “The Incredible Shrinking Ad” from The Atlantic is solid and examines this topic in the tradition of 1,000+ word journalism that is becoming more rare these days.

I have written on the power of curiosity (here and here) before here on DigNuggetville and it never surprises me how often this theme comes up in my search for nuggets; particularly the “why” question.

The other day, I was listening to “The Lost Interview” by Robert X. Cringely who had interviewed Steve Jobs in 1995 for an excellent documentary that aired on PBS titled “Triumph of the Nerds.”

In the interview, Robert asked Steve:

“You’re were 21 – you were a big success – you sort of done it by the seat of your pants – you don’t have any particular training in this (he was referring to strategic management). How do you learn to run a company?”

Jobs paused for 10 seconds and then says:

“Throughout the years in business, I found something which was… I always asked ‘why you do things’ and the answers you invariably get were ‘Oh that’s just the way it was done.’ Nobody knows why they do what they do. Nobody thinks very deeply in business. That’s what I found.”

Jobs goes on to give an example of early accounting practices at Apple. Finishing up, Jobs says,

“So in business, a lot of things are done….I call it folklore. They are done because they were done yesterday, and the day before, and so what they means is if you are willing to ask a lot of questions, and think about things and work really hard, you can learn business pretty fast. It’s not the hardest thing in the world.”

I was reading an interesting article the other day on CNNmoney.com. What originally caught my attention was the article’s title “Is Apple Cursed” questioning if Apple’s market dominance was soon to be in the rear view mirror. Then, what really caught my attention was the author; a brilliant marketing academic, Gerry Tellis, from the University of Southern California. I love to see examples when academics cross over into the mainstream as thought leaders and I wish I’d see more articles from academics in the popular press.

As I read the article, Professor Tellis describes a familiar story in the study of innovation; is rare, very rare for a company to maintain their market dominance for an extended period of time. Competition is fierce, consumer behavior changes, the marketplace changes, the technology landscape changes and nothing lasts forever.

Professor Tellis details;

“Success, and especially market dominance, breeds complacency, arrogance, and reduced innovation. Companies such as Sony in mobile music, Hewlett Packard in personal computers, Blackberry in smartphones, General Motors in automobiles, and Kodak in analog photography were at the top of their respective markets, when their decline began. What caused the fall?

Critics often fault the rise of external technologies when discussing a company’s demise. But that is a superficial cause. In all the above-mentioned cases and many others, the revolutionary innovations that catapulted upstart firms were also available deep within the bowels of these dominant companies. But those innovations were put on hold, ignored, or belittled. What caused firms to overlook such radical innovations? A risk-averse culture, that’s what. Such a culture stems from a firm’s dominance and its success with its current stable of products. My coauthors and I have called this the “incumbent’s curse.”

So the question is, has Apple peaked? Apple’s stock price performance over the last five months seems to indicate that the market believes Apple has peaked. Moreover, the scenario described above by Professor Tellis happened to Apple as well. From 1980 to mid to late 80’s, Apple was dominant in the personal computing market – first with the Apple II and then the Macintosh. By the early 90’s, “WinTel” (Microsoft Windows and Intel chips) were the dominant player. Apple almost went Chapter 11 by 1997.

To summarize, history tells us that very few firms can maintain its market leadership. While I would agree the data is clear, I would like to add a few thoughts to this conversation concerning Apple.

(1) Contrary to popular believe, Apple is not as top-down – either in a management sense nor with regards to innovation – as most observers would believe. While Apple is very hierarchical as a whole, Apple’s top management particularly the Top 100 as they call it, is very flat given a company that size. All of the key leaders meet every Monday and Apple believes everyone should work at headquarters and meet face-to-face. Perhaps in Steve Jobs’ time, innovation was more top-down at Apple but not any more. I’d bet the Apple faithful would be very shocked if Jony Ive was not part of the equation at 1 Infinite Loop.

(2) I believe there a number of misconceptions about Apple’s innovation cycle. First, I’d agree that Apple has had a number of major duds during Steve Jobs’ 2nd tenure (USB “puck” mouse, G4 Cube, MobileMe, “AntennaeGgte” on the iPhone 4 just to name a few). Second, the innovation cycle at Apple is much longer that most tend to believe. The original iPod was released in 2001, while the first iPhone was 2007 and iPad was 2010. The shortest of these cycles was three years while the longest was six. If these innovation cycles remain consistent, we should expect at least one major new product line from Apple in the next 12 to 24 months (e.g., iWatch or Apple TV anyone?).

(3) If one were to take a careful look back at the launch of each of those major Apple innovations, the business press was not universally applauding. When iPod came out, most pendants were perplexed to what was Apple doing. Journalists were very curious about the iPhone but questioned whether Apple could break into a market with so many established players, especially at that $499 price point. In 2010, the iPad was not nearly as well received as the iPhone (what do we need a giant iPod for?). Even in 2012, many pundits criticized Apple for developing the iPad Mini. Even I was critical that Apple missed the price point. The Mini sold out during the holiday shopping season and Apple never has more than 1 to 2 weeks of inventory for the Mini.

(4) Perhaps the most telling indicator of whether Apple will be able to maintain market leadership or become “cursed” is their internal culture. I would wholeheartedly agree with Professor Tellis that previous market leaders were risk-adverse, complacent and arrogant – incredulous that some other firm could knock them off their perch. One has to look no further back than to 2008 to 2010 while iPhone and Android destroyed Nokia and Blackberry’s worldwide market leadership.

(5) What makes Apple’s culture different? That’s an easy question: Creative Destruction. Economist Joseph Schumpeter coined this term and perhaps the easiest way to define it is cannibalization. My hypothesis is that for every firm that lost its market leadership, I suspect a culture that was too afraid of cannibalization if its own products. For the record, Apple is NOT afraid of cannibalization. In multiple examples turning Steve Jobs’ 2nd tenure, particularly with the iPod and iPhone lines, the new product made the previous product obsolete. Reporters asked Steve Jobs if he was afraid that the iPad would cut into Mac sales – we was not. Luckily for Apple, CEO Tim Cook also preaches the discipline of creative destruction (iPad Mini radically cut into iPad grande sales). In multiple earnings calls and interviews since becoming the CEO, Tim Cook has repeated the same mantra (paraphrased), “I’d rather we cannibalize ourselves than have someone else do it for us.”

In closing, I’m curious as everyone else to see what will happen to Apple. Will history repeat itself? Is Apple cursed like all those other firms who were once market leaders? Only time will tell but I believe Apple has the deepest leadership bench in tech and their culture is stronger than most. In my eyes, I still see Apple just as dominant over the next 3 to 5 years given what they have in the pipeline. Any time frame longer than that is too far out to project.

For those of you who have been tortured in one of my professional selling classes, you have heard me say, “less than 10% of total communication is actual words coming out of your mouth.” In other words, your body language, your tone of voice, and your eye content are more important than the actual words you use in an interview or a client meeting.

Translation: you can say everything right and still screw up the meeting!

The following article emphasizes this very point – particularly the eye contact. In my opinion, non-verbal communication is one of the most overlooked elements in relationship building.

While the world of search is well established, the world of social search is not. One of the podcasts I follow consistently is the Social Media Examiner by Michael Stelzner and I just listened to “Search and Social: What Marketers Need to Know about the Changing Landscape.” Many excellent topics were touched on including Facebook’s enhanced search with Bing, Google+ impacting search results, and even an excellent SlideShare nugget.

In class, I often talk about social media as being the wild, wild west. Social search is even more uncertain and unknown topic area and much is needed to understood in this area. Check it out when you get a chance.

The 3-D printing movement has been ramping up rapidly over the last 12 months as these printers have been dropping in price. These printers could easily be the catalyst of an entirely new DIY movement – one-to-one manufacturing. In your own home!

I heard this story on NPR this morning and I had to share. I could easily see the major players (e.g, Microsoft, Apple, Google, HP, etc) start buying players in this 3-D ecosystem this year.

I am happy to report that this little experiment I started a little over a year and a half ago is alive and well. This post is a milestone in my eyes – #200! In celebration of this milestone, I listed the Top 10 most viewed posts on DigNuggetville and it is quite easy to see, these topics are very indicative of Dr. Dan-o classroom discussion.

Thanks for all the interest and participation. I owe you more excellent nuggets because that is what I do.

I was having a conversation with a professor the other day and we were discussing web communities and user participation. Our chat brought me back to something I had heard in the past and wanted to share as a DigNuggetville Keyword Term: The 1% Rule.

Roughly speaking, it is very common within an Internet community or social network that 1% or less of the total members actually create content while most members are more passive participators in the community. Roughly speaking, the community will consist of creators (1%), some contributors (9%), but mostly passive observers (90%). Sometimes the 1% Rule is also called the 90-9-1 Principle but also represented as an 89-10-1 ratio as well.

So next time you see that Twitter feature article in the press, take notice how Twitter tries to defines “a user” and then reflect back to the 1% Rule.

Learning from failure and failing forward is a familiar theme here on DigNuggetville. Last night, while at the Science Fair for my kids, I saw an excellent quote from none other than professor innovation himself – Thomas Edison – on failing forward.

In various talks on the development process of the light bulb, Mr. Edison said:

“I have not failed 10,000 times. I have successfully found 10,000 ways that will not work.”